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UK's economy grew at 0.3% in the second quarter as expected by many analysts compared to 0.2% in the first quarter. The sluggish GDP data dampened expectations for the Bank of England to raise interest rates in the coming months. The pound initially fell from 1.3042 to 1.3010 (-32 pips) at the initial reaction to the data. However, the pound managed to climb higher to 1.3060 as the U.S. dollar weakened and short covering into the US open.

Sterling made extended gains against the US dollar in Europe on Thursday, testing the one-month high of 1.3007 from the 1.2820 level yesterday, as investors bought the pound on speculation that the Bank of England may begin to tighten monetary policy or perhaps raising rates in the short term future.

Sterling reversed its decline to 1.2705 after the initial selling in early Europe following the news headline that British Prime Minister Theresa May reached an agreement with the Northern Irish Democratic Unionist Party on Monday to gain coalition support for the UK Conservatives.

Sterling rose on extended gains from the 1.2675 level in the prior Asian session to rise to the intraday high of 1.2745 in the Friday European session as traders take into account the hawkish comment by one of the Bank of England MPC member, Krisin Forbes.

(Jun 20 Tues) Sterling fell against the dollar from 1.2740 to 1.2660 in reaction to the bearish comments from Bank of England's Governor Mark Carney who said that he still had concerns over the impact of Brexit on the U.K. economy and gave hints that he does not intend to rush into raising interest rates to address the weakness of the UK economy and subdued inflation.

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